Can Africa Own the AU-US Infrastructure Deal?

Since the African Union Commission (AUC) and the United States (US) government agreed on the Strategic Infrastructure and Investment Working Group (SIWG) in January, the platform is starting to take shape. They are identifying projects and building systems as both sides test each other’s ability to keep promises.

The SIWG is a new initiative aimed at attracting investment and boosting trade in Africa, especially from US private companies.

AUC Chairperson Mahmood Youssouf and US Deputy Secretary of State Christopher Landau have agreed that the SIWG will connect US funding and financial tools with AU-supported infrastructure. This will follow the AU’s Agenda 2063, Programme for Infrastructure Development in Africa (PIDA), and the African Continental Free Trade Area (AfCFTA).

On the US side, the Bureau of African Affairs is working with the US International Development Finance Corporation and the Export-Import Bank of the US. They are creating a task force made up of agencies and US companies interested in investing in Africa. Meanwhile, the AUC’s cabinet is organizing its parts of the working group.

The partners have also settled on a first list of projects to focus on. These include the jetty and port expansion in Nacala, Mozambique; another petroleum jetty in Mozambique; Namibia’s Walvis Bay integrated hydrogen hub; the long-delayed Inga hydroelectric scheme in the Democratic Republic of the Congo; and a data center. The data center is the only project not included in PIDA’s pipeline.

Linking SIWG projects to PIDA’s 69 priority projects is not just a coincidence. In its first decade, PIDA raised $82 billion against a target of $68 billion. The second phase is set at $161 billion, a figure that private investors are hesitant to fund. This means African governments and their borrowing are left to carry most of the burden, contributing to Africa’s debt distress.

Africa’s funding gap for infrastructure is estimated at $68 billion to $108 billion each year. The SIWG aims to fill parts of this gap that African governments cannot manage alone. Choosing projects from PIDA also helps Africa take ownership of the SIWG since these projects are designed to work together, covering transport, energy, information and communications technology, and water infrastructure.

The AU’s setup to meet the SIWG’s needs is unique. The departments of Infrastructure and Energy, along with Economic Development, Tourism, Trade, Industry, and Mining, are leading the partnership under the Chairperson’s guidance. The AU Development Agency, which implements PIDA, will handle delivery.

This is the first time the AUC will lead a commercial relationship with a major partner that directly involves private capital. But this new approach might be the AU’s biggest challenge.

The AUC is not a government. Its departments set the direction, while implementation mostly relies on specialized agencies that it does not control. Making the SIWG work will need quicker and more innovative methods than the AU is used to.

While AU structures support the SIWG, member states must be kept informed about progress, as projects span different countries. Creative ways are needed to win the support of local communities and citizens whose lands and livelihoods are affected by PIDA projects.

Since mobilizing the private sector is key, the AUC needs a plan to bring in selected African businesses into the public-private coordination that the SIWG requires. Support from African financial institutions like the African Development Bank, African Export-Import Bank, Africa Finance Corporation, and Africa50 could be vital as they have the resources and credibility to co-invest and reduce risks with American partners.

The SIWG could be a rare chance for the AU to offer something new: a set of real incentives that match continental priorities like PIDA and AfCFTA. A government that speeds up corridor reforms or aligns regulations could gain priority access to SIWG funding and technical help, giving the AUC more power to promote integration.

The challenges on the US side are different but still significant. American private investors are generally cautious about Africa. They have concerns about the rule of law and the stability of contracts, something seen even in important sectors like rare earth minerals.

Hopefully, the new $500 million US-Africa Strategic Investment Program, which offers grants of up to $50 million to reduce risks for private deals, will focus on partners committed to strengthening the rule of law and creating stable business conditions. Predictability, more than money, is what will help American firms compete for African infrastructure against faster-moving Chinese and Turkish state-linked builders who take on more risk.

Washington’s efforts to promote opportunities in Africa to the private sector should involve several players beyond the government. This is more important as the US diplomatic presence in Africa shrinks. With fewer US ambassadors confirmed for African embassies and plans to close some visa-processing centers, there will be fewer diplomats available to close deals and reassure investors.

American businesses will increasingly depend on intermediaries who understand both US expectations and African realities. African diaspora communities in the US and organizations like the US Chamber of Commerce and Corporate Council on Africa, which hold the annual US-Africa Business Forum, could help with this.

The SIWG is a fresh platform that places the AU as both a diplomatic and commercial partner to a major power. For it to succeed, the AU should act quickly to secure African private and institutional capital and make sure the pilot projects are based on the agreement of the countries and communities involved.

The US should see the rule of law and its shrinking diplomatic influence as key challenges for the working group. Both sides have expressed a desire to change the narrative. The next 12 months will reveal if they are serious.